second quarter report 2007 - ericsson · web 2.0 mobile services web centric devices one button...

SECOND QUARTER REPORT2007

HENRY STÉNSONSenior Vice President Communications


Safe Harbor Statement

This presentation contains forward looking statements. Such statements are based on our current expectations and are subject to certain risks and uncertainties that could negatively affect our business. Please read our earnings reports and our most recent annual report for a better understanding of these risks and uncertainties.

CARL-HENRIC SVANBERGPresident and CEO


2007-07-20© Copyright Telefon AB LM Ericsson 2007. All rights reserved SECOND QUARTER REPORT 2007

The quarter in summary

3 b subscriptions – a milestone earlier than expected– Accellerating data traffic – quadrupled in 90 days in Sweden

Solid performance - 8% growth with stable margins– Continued market share gains

Large project completions create regional sales fluctuations– Asia Pacific strong in all areas – recovery in Americas


The quarter in summary

3 b subscriptions – a milestone earlier than expected– Accellerating data traffic – quadrupled in 90 days in Sweden

Solid performance - 8% growth with stable margins– Continued market share gains

Large project completions create regional sales fluctuations– Asia Pacific strong in all areas – recovery in Americas

Extended Ericsson Response agreement with UN


Success for mobile broadband

Part of daily life - will exceed fixed broadband over time– Telia 3G cards outsold other mobile devices in June

164 WCDMA networks – 117 HSPA – up to 3.6 Mbps– Ericsson has delivered majority of HSPA networks

WCDMA in 73 countries and growing quickly– Paves the way to close digital divide

Internet anytime, anywhere


Ease of use!

Web 2.0 mobile services

Web centric devices One button searchUser generated contentHSPA a prerequisiteNew business models

Source: Softbank

Up 50 times

Link to Yahoo

One button click

No.

of p

age

view

s

June 12006

July 12006

October 1 2006

April 30 2007


Group sales SEK 47.6 (44.0) b.* – Growth of 8% - despite continued USD decline

Gross margin 43.0% (42.6%)– Stable sequentially

Operating margin 19.4% (18.4%) – 16.4% (16.3%), excl. SEMC, up 0.9% sequentially

Q2 financial highlights

*excl. divested operation


Q2 financial highlights (continued)

Operating income SEK 9.3 (8.3) b.– Up 12% year-over-year

Operating cash flow SEK 4.2 (0.2) b.– Positive trend – strong focus

EPS SEK 0.40 (0.36)– Up 11% year-over-year


Networks

Second quarter

2007 2006

Second quarter Change

Net sales

Operating margin

29.331.4 15%

17%

7%

19%

Technology leadership – scale - operational excellence

First quarter Change

2007

Stable growth and increasing margins – good growth in fixedBreakthrough IP broadband with AT&T – vote of confidenceRecord GSM volumes – 1 million radio base stations

19%

33.7

- -

SEK b.


Professional Services

Second quarter

2007 2006


Net sales

Operating margin

9.59.2 8%

2.6

11%

2.4


2007

Up 14% in local currencies - stable marginsManaged services up 24% in local currenciesGrowth trend continues with 11 new deals

Of which Managed services

1 billion subscribers supported – 135 million under management

15%

2.9

10.3

21% 12%

16% 15%- -

SEK b.


Multimedia

Second quarter

2007 2006


Net sales

Operating margin


2007

Sales and margins fluctuate with projects in build-up phaseMobeon, Tandberg and Drutt acquired LHS – foundation for leadership in converged charging

Building position in segment with great potential

SEK b.

3.43.4 8%

8%

6%

1%0%

3.6

- -


Regional update, Q2 2007- Ericsson sales (BSEK) and growth (%) year-over-year

Slow investments - owner changes and network sharing talksQuickly accelerating data traffic – will create capacity needsManaged services in focus – contracts not yet consolidated

Western EuropeQ: 12.4 b. 0%


Regional update, Q2 2007 - Ericsson sales (BSEK) and growth (%) year-over-year

Continued high activity – sales fluctuate with large projects Africa at 140 million subscribers – a 500 million potentialRussia down while preparing for 3G

Central & Eastern Europe,Middle East & Africa

Q: 11.5 b. 0%



Continued high activity, eg. Japan, Bangladesh, IndonesiaIndia strong - Bharti USD 2 b. deal, BSNL in final phaseContinued strong 2G growth in China – market share gains

Asia PacificQ: 16.6 b. +32%



Sales increase from expected market recovery3G rollouts ongoing – launched in Chile and Argentina Managed services in increased focus

Latin AmericaQ: 4.1 b. +7%



Improved performance versus 2006 Breakthrough IP broadband agreement with AT&TConsiderably strengthened position through acquisitions

North AmericaQ: 3.0 b. -18%


Acquisition roadmap and updateIntegration on plan – intensive acquisition phase behind us

Marconi supply chain changes done – integration completeRedback – alignment of supply and sales channelsEntrisphere – first contracts wonTandberg Television consolidated from May 2007Mobeon and Drutt acquired and integratedLHS public offer – over 75% acceptance obtained

Organic growth and bolt-on acquisitions


Sony Ericsson Q2 highlights

Units shipped up 59% to 25 million year-over-yearExpanding with premium propositions in entry segment ASP down from changed product mix


Sony Ericsson highlights

Sales up 37% to EUR 3,112 m - NIBT up 55% to EUR 327 m– NIBT flat excl. increased parent royalties

Market share gains – now at 9.6% in units– Latin America, Europe, Middle East and Africa


Market outlook

.

Well positioned to capture market opportunities*Measured in USD, this slide contains forward-looking statements

For 2007 we believe that the GSM/WCDMA track within the global mobile systems market, will continue to show mid-single digit growth*

Addressable market for professional services to show good growth*


Q & A

second quarter report 2007 - ericsson · web 2.0 mobile services web centric devices one button...

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